Specialist insurance company Hiscox Ltd (HSX.L) Monday reported a fall in profit for the first half of fiscal 2010, despite an increase in premiums earned from last year, reflecting higher claims following a string of catastrophes.
Hiscox's profit before tax declined to GBP 97.2 million from GBP 141.4 million last fiscal.
Profit attributable to the company was lower at GBP 78.6 million or 20 pence, compared with GBP 122 million or 31.8 pence last year.
Total comprehensive income increased to GBP 112.97 million from GBP 44.0 million the previous year.
Revenue rose to GBP 654 million from GBP 641.5 million in the corresponding period last year.
Net premiums earned rose to GBP 592.7 million from GBP 545.4 million a year ago. At London, net premiums earned was lower at GBP 216.7 million, compared with GBP 235.6 million. Net premiums earned from UK and Europe rose to GBP 210.0 million from GBP 174.6 million. Net premiums earned from International market climbed to GBP 165.8 million from GBP 135.1 million.
The company derived lower revenues from investment investment of financial asset at GBP 46.6 million, down from GBP 85.4 million last year.
Further, Hiscox had to grapple with higher expenses totalling GBP 553.8 million, versus GBP 497.7 million last year. This was due mainly to a rise in claims expenses to GBP 324.9 million from GBP 231 million, hurt by UK winter freeze, Chile, Windstorm Xynthia and Deepwater Horizon.
The Group's combined ratio, a measure of profitability used by an insurance company, rose to 93.6% from 87.8%, hurt by catastrophe losses.
Hiscox estimates claims for the Chilean earthquake and Windstorm Xynthia to remain unchanged at possible net claims of GBP 100 million. With regard to the Deepwater Horizon event, claims are expected to remain at less than GBP 10 million.
The company, however, noted that its specialist businesses continue to grow well, with Hiscox UK up 11.6%, Hiscox Europe up 12% and Hiscox USA up 22.5%.
The Board has approved an 11% increase in the interim dividend to 5 pence, payable on September 28 to shareholders on the register at the close of business on September 3.
Cash and cash equivalents at the end of the period was GBP 357.5 million, versus GBP 434 million a year ago.
Looking ahead, the company noted that the capacity in the insurance market remains plentiful despite significant losses in the first six months, and the momentum is likely to be sustained in the absence of any disastrous hurricanes over the coming months.
HSX.L is currently trading at 353.70 pence, up 10.00p or 2.91%, on the LSE.
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